Research, Gov’t Subsidies Spurred China to Win World’s EV Battery Race

At the 2008 Beijing Olympics, athletes, journalists and officials from all over the world were transported by a fleet of sleek buses sporting a white, blue and green design as they zipped between venues in the Chinese capital.

The two factors that led to the meteoric rise of China's lithium industry are a huge domestic market “walled off and preserved” for local firms and coordinated government support across the supply chain. (Photo: Cui Jingyin, China Daily HK) 

The roughly 50 Olympic buses ran on lithium-ion batteries to help Beijing host a “green and high-tech” Olympic Games, Xiaoying You reported for BBC News.

It also marked the country’s first foray into creating a lithium-ion battery industry for electric vehicles (EVs), laying the groundwork for China’s ascent to world leader in the technology two decades later.

Three years earlier, China had only two manufacturers of such batteries. But developing and producing EV batteries for the global event was no easy feat.

In late 2003, Mo Ke and his colleagues at the Beijing New Materials Development Centre — a government-affiliated research institute — were tasked with analyzing China’s lithium battery industry as part of Beijing’s preparatory work for the Olympics.

What led to its meteoric rise? The answer lies in a combination of factors.

Two of them are a huge domestic market “walled off and preserved” for local firms and coordinated government support across the supply chain, says Xie Yanmei, an independent analyst.

Consumer subsidies, state-sponsored rollout of charging networks and a policy mandating that automakers produce EVs also helped, she notes. Chinese companies also proved adept at large-scale production and cost control — both key to EV battery manufacturing.